Correlation Between Stellar and Pimco Flexible

Can any of the company-specific risk be diversified away by investing in both Stellar and Pimco Flexible at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stellar and Pimco Flexible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stellar and Pimco Flexible Credit, you can compare the effects of market volatilities on Stellar and Pimco Flexible and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stellar with a short position of Pimco Flexible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Pimco Flexible.

Diversification Opportunities for Stellar and Pimco Flexible

0.66

Correlation Coefficient

Stellar  Pimco Flexible

Poor diversification

The 3 months correlation between Stellar and Pimco is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Pimco Flexible Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Flexible Credit and Stellar is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stellar are associated (or correlated) with Pimco Flexible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Flexible Credit has no effect on the direction of Stellar i.e., Stellar and Pimco Flexible go up and down completely randomly.

Pair Corralation between Stellar and Pimco Flexible

Assuming the 90 days trading horizon Stellar is expected to generate 35.23 times more return on investment than Pimco Flexible. However, Stellar is 35.23 times more volatile than Pimco Flexible Credit. It trades about 0.12 of its potential returns per unit of risk. Pimco Flexible Credit is currently generating about 0.19 per unit of risk. If you would invest  10.00  in Stellar on October 24, 2024 and sell it today you would earn a total of  34.00  from holding Stellar or generate 340.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	48.34%
Values	Daily Returns

Stellar  vs.  Pimco Flexible Credit

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pimco Flexible Credit

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Flexible Credit are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Pimco Flexible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Pimco Flexible

The main advantage of trading using opposite Stellar and Pimco Flexible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Pimco Flexible can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Pimco Flexible will offset losses from the drop in Pimco Flexible's long position.

The idea behind Stellar and Pimco Flexible Credit pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.